There are jobs that are extremely well paid and, unfortunately, a not insignificant number of jobs and occupations whose pay is almost shameful. Sadly, so far the legal regulation on the minimum wage has not changed anything so far. For the number of those who are classified as so-called “working poor”, so low-wage earners, has been steadily rising for years. Currently, about 5.5 percent of the workforce is considered poor and more than eight percent of the self-employed. Anyone who is low-income earners faces the constant danger that they will not make ends meet month after month. In addition, it is impossible to build up any reserves due to low-paid work or to achieve the status of a solvent client at the bank – as hard as it sounds. And yet, each one of us can come into the situation that a much-needed purchase must be made, which can not be lifted from the liquid funds. So you have to get a loan and that goes for low income people as well.
Low-wage earners are considered problematic in the case of a loan
The fact is that as a low-income banker, you are seen as a potential lender more critically, if not generally rejected. But one should not be satisfied with that, because everyone has the right to be regarded as a potential lending customer fair and, above all, objectively. To achieve this as a low earner with the plan to take out a loan, a lot can be done by yourself. So there are a few things to consider when borrowing to positively influence the bank’s decision. The fact is that if a regular income from which the loan can be repaid, is present, in principle, a loan is possible. So the key questions are: How high must a regular income be in order to get funding? So what must low earners pay attention to, so that they can take out a loan despite low incomes?
Credit as a low-income earner: It is important to pay attention to these points!
Above all, it is a low-income earner with a credit wish to be aware that there is a fixed minimum income, from which banks basically give a loan, NOT. As a result, each bank individually decides whether a person gets a loan or not. The level of income is only one aspect of many that banks consider when deciding on lending. Other significant factors of credit are:
Creditworthiness of the applicant
The creditworthiness of a potential credit customer is the number one decision criterion for classic banks. From the bank’s point of view, the creditworthiness of a customer is a clear indication of a customer’s willingness to repay in the past. This is measured by the so-called credit score. The higher this value, the better from the perspective of the bank. It follows that even low earners with a positive credit rating can significantly increase the chances of a loan.
Length of employment
The second decisive criterion in lending is the issue of income and duration of employment . In this way, banks can assess whether the applicant has a regular income even during the repayment period. If, however, you are still applying for a loan or are still in the probationary period or on a fixed-term contract, the likelihood of a loan is only given if the desired loan is repaid before the end of the time limit.
Existing loan commitments
If there are already several loans that make up a significant part of the monthly financial burden in the budget, most banks will hardly approve another loan. However, it is possible to combine all current loans for a cheaper loan, to extend the term and, if necessary, to top it up with a small amount. Here, however, it is important to plan the financial situation of the borrower ahead of time.
Reasonable loan amount
In fact, it goes without saying that the desired amount of credit will fail in a context that reflects your own financial capacity as a borrower. Which means that the desired loan is in proportion to the income.
Conclusion on the subject of “Low-income loans”
As points now show, it is not an impossibility to get a loan with a low monthly income. Of course, it is hard to get high loan amounts with very long maturities with a low financial capacity, but when it comes to getting smaller amounts with a manageable repayment term, the chances are not so bad under the mentioned aspects.
Editor: Markus Gildemeister
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